Rubber Drops as Crude Oil Declines; Spot Price Gains to Record

Rubber Drops as Crude Oil Declines; Spot Price Gains to Record

April 23 (Bloomberg) -- Rubber declined for a second day as tight supply in Thailand, the largest exporter, drove the nearby contract on the Tokyo Commodity Exchange to a record high.

September-delivery rubber, the most-active contract, dropped as much as 1 percent to 315.1 yen per kilogram ($3,380 a metric ton). The April-delivery contract, which expires today, jumped as much as 4.9 percent to 472 yen, a record price for a nearby contract, before settling at 455.4 yen.

“A seasonal decrease in supply from Thailand gives support to futures,” Hisaaki Tasaka, an analyst at Tokyo-based commodity broker ACE Koeki Co., said today. “The market may remain buoyant until Thai shipments start picking up as early as June,” he said.

September-delivery rubber tumbled 5.5 percent this week, the biggest decline since the week ended Dec. 11. The contract dropped 0.8 percent to settle at 315.7 yen.

“The price gap between April-delivery futures contract and those of later months was more than 100 yen, reflecting limited supply,” Chaiwat Muenmee, an analyst at DS Futures Co. said by phone from Bangkok.

Speculators with short positions in April futures have to buy back the contract today or the raw material will be delivered.

Crude oil dropped as much as 0.4 percent to $83.37 a barrel before trading at $83.68.

Exchange Probe

The price of the April contract surged 37 percent this month. The Tokyo exchange checked its members’ positions in rubber futures after volatility jumped this week, Kazunari Hayakawa, executive managing officer for the exchange, said in an interview yesterday.

“The investigation created negative sentiment in the market,” DS Futures’ Chaiwat said.

Cash prices in Thailand extended gains because there are limited supplies in the market, the Rubber Institute of Thailand said on its Web site today.

The auctioned price of Thai RSS-3 grade rubber gained 1.1 percent to 119.55 baht ($3.70) a kilogram, after reaching a record of 122.89 baht on April 21. The free-on-board price, which excludes freight and insurance, of Thai RSS-3 grade rubber for May-delivery rose to a record 128.55 baht per kilogram, the institute said.

Thailand is in the wintering season from February to April, when rubber trees shed their leaves and latex output slows, diminishing supplies.

September-delivery rubber on the Shanghai Futures Exchange closed little changed at 24,315 yuan ($3,561) a ton.